Antecedents of High-growth and Gazelle Enterprises: An Empirical Study
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This research explores a problem important to both management strategists and policy-makers: what makes some companies grow rapidly? This topic is important as high-growth companies create a disproportionally high percentage of new jobs. The literature frequently cites sustainable competitive advantage as an explanation for firm performance and growth. Companies can build competitive advantage through the accumulation and development of resources, strategic orientations and unique capabilities. More recently, researchers have looked outside the firm for explanations, concluding that inter-firm co-operative networks and alliances are also important sources of competitive advantage leading to firm growth. While there is an extensive body of literature on firm growth, few studies have specifically addressed the antecedents of rapid firm growth. Much of the available literature is descriptive, for example Birch’s (1987) study of gazelle firms or the OECD (2008) report on high-growth firms. There are however few theoretic models or empirical tests to explain the success of these firms. In response this research explains the occurrence of high-growth firms in terms of the resource- and knowledge-based view, dynamic capabilities, core competencies, and strategic orientation theories. Structural equation and growth mixture models were tested using data gathered from a survey administered to a cross-industry sample of Canadian businesses. The study found that high-growth forms were more likely to be innovators, as well as to have a combination of strong entrepreneurial and market orientations and the ability to manage their business networks. These findings highlight the importance to management of not only responding to market demands but leading the market with innovation and extending firm capabilities and reach through networking. In addition, this research indicates that institutional support for innovation, networking and market development would assist in developing high-growth firms in Canada.